Substantially overpaying mortgage query !

nirish

Along with my partner we are in a position currently where we could comfortably pay £3000 a month into a mortgage.

However we don't really want our monthly payments to be more than £1500 to allow for any future situations such as my partner going part time with children.

What mortgages should I be looking at where I there is no fine for overpaying. We could be looking to overpay by 100-200% in any given month.

nirish

Basically what I'm looking for is the best mortgages with an unlimited overpayment allowance.

So far I have found no fixed mortgages allowing this.

As far as trackers go I have these:

Nationwide 2.59% £99 setup
First Direct 2.38% £1499 setup
HSBC 2.38% £1699 setup

Where else should I be looking, have I overlooked any fixed rate mortages allowing unlimited overpayments.

InsertWittyName

Have you looked into offset mortgages? These would allow you to put the full £3k in but draw it back if needed.

nirish

The drawback of this as far as I'm concerned is that the mortgage would be still be paid over the full term and would therefore be subject to any (likely) rise in interest rates in the incoming years.

My plan was with large overpayments to significantly reduce to total owed while rates are at this remarkable low.

Would you agree with this ?

My situation is 200k deposit, 150k mortgage required.

Considering 10yr mortgage which equates to monthly payments of approx £1500.

I would like to be able to pay £3000+ a month and cut this time in half but not be committed to that amount in case my situation changes.

Does this seem reasonable and what mortgages are out there which allow unlimited overpayments ??

nirish

Does anyone have any thoughts on what direction you would take under this scenario regarding mortgage options.

I would also like to know if anyone has any recommendations as to which banks offer the best mortgages with unlimited overpayments allowed, I don't find it easy to search for these on the comparison websites.

kkgree1

I can't comment on current deals but we have a lifetime tracker with Britannia for 1.99% over base rate that allows unlimited overpayments.

We currently overpay by £1200 a month so if you're looking to do similar, a tracker or offset may be worth investigating. We're looking to get our mortgage down to 7k within the next 2 years then leave it to sit for the rest of the term (circa 20 years). Idea behind this is to make life easier when we have a family and also still allows access to the same deal should we ever choose to move.

Good luck with your search.

bigadaj

I know what you mean but to me it seems to be over complicating matters. You won't be able to overpay a fixed rate as that largely negates the point of them.

Mortgages typically allow 10% without penalty, doing this ona normal 25 year repayment reduces th term to well under ten years.

Given your figures the alternatives might be to buy a smaller house with your deposit, or if you wait to buy for four years you could pay cash!

nirish

Definitely buying my own place this year and 200k doesn't buy what I want so budget is 350k

Im not really interested in an allowance of 10% overpayment, I really do want unlimited so I can put in as much as possible on a regular basis without committing myself to large monthly payments.

On your Britannia mortgage you can pay absolutely as much as you want into the mortgage at any time ?? I wasn't sure how possible this was.

Is it commonplace to get a mortgage with say a 10yr term or is absolutely everyone on 25+

kkgree1

Yes, unlimited overpayments allowed on our mortgage. Had a quick look and the HSBC lifetime trackers currently on offer also offer unlimited overpayments (though quite hefty intro fee at £1500).

You can get reduced term mortgages e.g. 10 years but you will have a higher payment but less flexibility to increase the term (& subsequent payments) if needed.

I think it's worth waying up the pros and cons of either a fix or tracker. We were all set on taking a 5 yr fixed rate two years ago but am so glad we took the risk and went the tracker route. It's all down to risk and a bit of luck though!

Gizmo247

nirish wrote: »

The drawback of this as far as I'm concerned is that the mortgage would be still be paid over the full term and would therefore be subject to any (likely) rise in interest rates in the incoming years.

My plan was with large overpayments to significantly reduce to total owed while rates are at this remarkable low.

Not quite sure what you mean here. With offsets to term is irrelevant, it is only a marker from when the debt must be repaid.

I pay between £1000-£2000 into my offset mortgage, usually into a linked savings account which I then sweep in the mortgage account when the balance looks large. This reduces the amount owed. Admittedly the term remains the same but early next year the mortgage balance will be only £200 which will be fully offset so 15 more years of interest on nothing will be still be nothing. I can then keep the mortgage open with the full original balance instantly available for many years to come.

getmore4less

nirish wrote: »

The drawback of this as far as I'm concerned is that the mortgage would be still be paid over the full term and would therefore be subject to any (likely) rise in interest rates in the incoming years.
?

Offsets reduce the cost just as if you had overpaid the same amount just you have the option to still use the money.

They are more flexable and can be paid off just as quick as a regular mortgage.


As above, once any mortgage is set up the term only sets the minimum payment and is irelevent after that.

It is the payments that determine the actual term.